Budgetting

I know this is something that your mother told you that you needed to do, and if she didn't she should have. This is extremely important! I never realized how much money my wife and I waste, yes WASTE, every month by not being on a budget. Let me put this into perspective. After putting our monthly income on a budget I found that we WASTE almost $500 a month! 500 dollars!

I sat down one weekend and scoured all of my old saved utility bills, electric, rent, water, phone, internet, etc and separated each one, added 12 months of them together and divided by 12 to get a "monthly average over a year" then recorded this number on a piece of paper. After all the normal "bills" were done into monthly averages, car payments, utilities, rent, credit card, etc. I sat down with my bank statements, this part took awhile. I needed to figure out how much we spent on gas and groceries. I looked at statements and averaged and looked at more statements and averaged some more.

Many people recommend the "envelope system" which is basically taking your money that you have budgeted and putting it into an envelope and if there is no money in the envelope you can't buy anything from that "area" whether it be groceries, gas, or going out to eat (and if you do you have to "rob" another envelope to cover it). This system works pretty will in a cash society where everyone uses cash, When trying to budget I realized this would be a pain for us because our check are direct deposited into the bank (like most people) and we never see the cash so putting it into envelopes is tricky. We decided the best thing to do was put play money in the envelopes as a place holder and make sure we're diligent to remove it when we spend something, even $1 in that category.

Like I said, budgeting our income showed me that we have a surplus of almost $500 that doesn't go towards bills, groceries, gas, insurance, car repairs, or doctors bills and that usually just disappears throughout the month. We've decided to take this extra $500 and apply it to our debts to expedite the process of getting out of debt (without extra payments and without adding more we're scheduled to be out of debt in 2017...no thanks!)

Basically I highly recommend getting on a budget, as will EVERY OTHER financial counselor you will ever talk to! This is the only way to track your expenses and the cut frivolous spending. You don't have to use the envelope system I outlined, but use something! Any budgeting system you can find that works for you is better then none at all!

Stop in tomorrow to read my review of an online budgeting tool that I have used and is really great! It automates much of the process, I just found a manual process held us more accountable to our spending. If you like online banking this tool might work for you!

Jesse